Korean cosmetics win in Japan with price, quality and idols
Hirona, a 26-year-old office worker in Hokkaido, Japan, always carries a makeup pouch full of Korean cosmetics. Her favorite items are cushion foundation compacts from Missha and eye shadow from Etude.
“Missha's cushion foundation compact gives full coverage and a dewy finish. They are of great quality and offered at very affordable prices,” Hirona said. “They are very popular among Japanese, regardless of age, as they went viral via many media channels, like Instagram and fashion magazines.”
“Even my grandmother uses Missha's cushion foundation compact.”
Japan’s largest trading partner for cosmetics products has been China for a long time. But Korea traffic is picking up as K-beauty is following K-pop, K-movies and K-food.
Social media channels such as Instagram and YouTube have been key drivers in increasing the popularity of Korean cosmetics among Japanese customers.
In 2020, Korea's exports were down 5.4 percent to $512.85 billion due to the coronavirus pandemic, according to data from the Ministry of Trade, Industry and Energy. But cosmetics exports were strong, up 15.7 percent to $7.57 billion.
Japan was definitely one of the biggest importers of Korean cosmetics products.
According to data compiled by the Korea Trade-Investment Promotion Agency (Kotra), Japan imported 62.5 billion yen ($577 million) worth of Korean cosmetics products in 2020, a 37 percent on-year increase. In 2018 and 2019, the country imported 36.5-billion-yen and 45.6-billion-yen worth of Korean cosmetics products, respectively.
This puts Korea as the No. 3 player in terms of the volume of cosmetics products that were imported into Japan as of end of 2020, holding a 13.6 percent share. In 2018, Korea was in fifth place.
The presence of Chinese cosmetics products in the Japanese market has been declining steadily. Japan imported some 80-billion-yen worth of cosmetics products from China in 2019, but the volume declined to 76.6 million yen last year. China is still the No. 1 trading partner of Japan in the cosmetics sector, with a 16.65 percent share, followed by France's 14.79 percent.
Road shop brands boom
Korea’s road shop cosmetics have been leading in Japan. Road shop brands refer to cosmetics that have low- to mid-priced products that people can buy at individual stores on the streets or via franchise networks.
Missha’s M Magic Cushion compact has been a huge hit among Japanese customers, with over 20.26 million units sold as of end of December last year.
This comes only five years after Able C&C, the operator of Missha, first released the product in the Japanese market. This also means that an average of 10,719 M Magic Cushion compacts have been sold every day in Japan, according to Able C&C.
The company also operates cosmetics brands A’pieu and Stila.
In July 2016, the M Magic Cushion compact was selected as a “hit product” by Nikkei Trendy, a monthly magazine published by Nikkei. The magazine regularly introduces products or services that will likely become popular in Japan in the near future, and the M Magic Cushion was the only cosmetics product selected.
The media outlet said that the M Magic Cushion compact is good for coverage and has become “an essential cosmetics product for Japanese women.”
“In mid- and late-2000s, the first thing that Japanese would think of when they hear about BB cream was Missha,” said Kang In-kyu, head of Able C&C’s Japan operation. “But now, Missha is very well known with ‘cushion’ products among Japanese people.”
“Missha was the one that created the ‘cushion’ category in the Japanese cosmetics market.”
Despite the coronavirus pandemic, Able C&C’s Japan operations posted record revenue of 38.6 billion won ($34.8 million) in 2020.
If Missha has cushion compacts, Clio has been attracting Japanese customers with its popular eye shadow palettes.
Clio’s Pro Eye Palette, one of the company's best-sellers, was selected as the No. 1 cosmetics in the 2020 Best Cosme Awards by LIPS and No. 1 in the palette category in Rakuten Cosme Award.
On Rakuten, Japan’s dominant e-commerce company, the top three products in the palette category are currently Clio’s eye palette products.
Despite the coronavirus pandemic, Clio’s Japan operation posted 36.6 billion won of revenue in 2020, up 97.5 percent from the previous year.
Of that, some 20.1 billion won was from online sales, while 16.5 billion won was from offline shops. That’s up 123.3 percent and 73.1 percent, respectively, compared to the previous year.
The revenue is likely to increase further and reach 40.1 billion won in 2021 and 47.1 billion won the next year, according to an analyst Ha Nu-ri from DS Investment & Securities.
“Koreans are very sensitive to trends, and Korean cosmetics products are gaining popularity via social media,” said a Kotra official at its Tokyo trade center. “Some Japanese customers even buy them in Korea and get them delivered to Japan. In some cases, cosmetics brands release products in the Japanese market first before they introduce them in Korea."
Missha and Clio are the participants of the Kotra's global hidden champion program, which the agency helps SMEs to expand their exports experience through customized one-on-one support services.
K-pop star leads
Shiori, a 25-year-old resident of Hokkaido, said she first tried Korean cosmetics products because her favorite K-pop idol was a brand model.
“I really want to have a beautiful face like K-pop idols,” said Shiori. “I feel like I could be able to have Korean beauty by using Korean cosmetics products.”
Shiori said almost all cosmetics products she uses now are from Korean brands, including powders from Innisfree, eye shadows from Clio, lipsticks from Hera and cushion foundation compacts from rom&nd.
K-pop stars get major credit for the increasing popularity of Korean cosmetics in the Japanese market. Having them as models is considered to be the most effective way to attract Japanese customers and boost sales.
Able C&C recently hired Sana and Dahyun of popular girl group Twice as exclusive models of its skincare brand A’pieu.
Clio is trying to attract Japanese cosmetics market with actor Ko Min-si. Ko has been gaining worldwide fans since she appeared in Korean Netflix original “Sweet Home.”
Clio also has separate male models, the members of boy group Stray Kids. The brand is also targeting the Southeast Asian market.
Kotra was told by a person from @cosme late last year that with the growing popularity of K-pop stars, K-dramas and idols, as well as the image that Korea is a very trendy country in the beauty sector, Japanese customers are convinced that Korean cosmetics products are of great quality. Sales of Korean cosmetics brands take up some 10 percent of sales in @cosme stores, and it has been increasing.
In September, Japan’s Marui department store opened Beauty Trip Korea at its Yurakucho branch in Tokyo. The event, which was held for a month, was intended to offer Japanese customers a chance to experience various products from Korean cosmetics brands and purchase them, as they were not allowed to travel due to the pandemic. More than 40 Korean cosmetics brands participated in the event to promote and sell their products.
As a new wave of Korean culture spreads around the world, localized marketing strategies is proving to be the key to lasting success.
In 2017, Missha decided to make a big change in its distribution structure in the Japanese market. The cosmetics brand closed all of its stores in Japan and chose to sell products through Japan's retailers, such as drugstores like Matsumoto Kiyoshi.
This was a move to target Japanese customers who prefer to shop for cosmetics products via drugstores over visiting branded offline shops to get certain products. Just like Korea’s Olive Young, drugstores sell various items including skincare products and daily necessities, from many different brands.
“In the past, I had to visit the offline shops of Korean brands to get products or ask my friends to buy lots of cosmetics items for me whenever they visit Korea for travel,” Natsumi, a 27-year old office worker in Hiroshima, said. “But it’s really good that Korean cosmetics products are now available at many retailers in Japan including drugstores.”
“They are literally everywhere in Japan now, and all my friends love using Korean products.”
Missha cosmetics products are now available at more than 25,000 retail stores in Japan, including drugstores.
Gelato Lab, a nail company that is popular for its nail stickers and nail tip products, is generating more than half of its revenue in Japan.
Started as an in-house venture of e-commerce operator TMON in 2016, the company operates Gelato Factory, which sells various nail products, and Gelato, an app that offers people information about some 11,000 nail shops across the country.
As many Japanese companies require workers to have neat nails, Gelato Lab came up with Office Nail. The product was sold out in just two days, according to the company.
BrandX acquired 59.34 percent of Gelato Lab late last year.
The nail product company posted 18.2 billion won of revenue in 2020, and of that, some 10 billion won came from the Japanese market. The result came only a year after the company entered the Japanese market.
Its annual revenue in 2017 was only 500 million won.
The nail company is currently preparing to go public next year as a Kosdaq stock, though no schedule has been released yet.
BY CHEA SARAH [email@example.com]